(MENAFN - ING) USD: Fed providing some breathing space
The Fed minutes provided some breathing space to risk assets as they struck a cautious tone, with the committee seemingly aware of the upcoming spike in US inflation in the second quarter and is unlikely to overreact until it is confident that inflation is on track to exceed 2% for some time.
Despite the notable rise in US Treasury yields this year, emerging market FX remains relatively resilient. Not only are EM FX valuations not overly stretched, many EM currencies (mainly outside Asia) are benefitting from rising commodity prices, but as long as the rise in US Treasury yields is accompanied by improving global economic prospects, this FX segment should continue to show signs of relative resilience.